The Critical Role of Exports in employment generation

Only four developing countries, South Korea, Taiwan, Singapore and China have transformed themselves economically in three decades and ‘exports’ have played a key role in their transformation. China, with its population comparable to India, surpasses India in exports in major sectors like merchandise, apparel, electrical and electronic products and footwear and that too by a huge margin.Vietnam, which is less than one-tenth of India in terms of population as well as GDP, exported more apparel in value terms than India. 

Way ahead to ensure increase in exports:

  • Making products competitive in the global market – Discipline of the global economy is what leads to fast productivity growth. Exporters must compete against the best in the world and must therefore constantly upgrade technology, management and product quality to remain competitive.
  • Exporters must leverage scale of economies which would help them employ more and more workers. The bigger firms must create an ecosystem that enforces discipline and high productivity on smaller firms as well.
  • Exporting firms must maintain high productivity, which translates in high wages for their employees. Non-exporting firms must either become ancillaries of the exporting firms or must compete against them in the domestic market. In either case, they must achieve high productivity to survive, which allows them to pay competitive wages.

Source: NITI AAYOG Three Year Action Agenda, 2017-18 to 2019-20.